Morningstar Advisor - June/July 2010 - 22

Advisor Profile

Carl Dockery, president, Alpha Advisors

MAPTX, Matthews China MCHFX, and Dreyfus Greater China DPCRX.

At every stage of his investment process, Dockery relies on the research and presentation capabilities of Morningstar Office. He begins by using capital market assumptions developed by Ibbotson Associates (a subsidiary of Morningstar) to create risk/return portfolios along an efficient frontier, then matches clients to those portfolios through Morningstar’s risk-assessment questionnaire. Dockery regularly runs screens of Morningstar data to rank funds and survey category performance, and he uses Morningstar’s portfolio analytic tools, such as Portfolio X-Rays and Snapshots, to verify and test portfolios once they’re built.
How he caught our eye: Dockery is an enthusiastic advocate of great active fund managers—and for using Morningstar tools to track them down. Career path: After earning a B.A. in humanities at Southeastern University, Dockery spent several years pursuing graduate study in the philosophy of religion at Denver Seminary. Subsequently, he worked for a dozen years at a reinsurance business owned by his father, where his interest in investing began. He worked for a local broker-dealer starting in 2001 and formed Alpha Advisors in 2006. Personal: Age 47, married with one daughter, age 6, and two dogs. Enjoys travel, bird-hunting, skiing, diving, and fishing. Favorite funds: Fairholme FAIRX, FBR Focus Investor FBRVX, First Eagle Global SGIIX, and PIMCO GNMA PDMIX.

The “Humble Profession”

Alpha Advisors has about 200 clients, and new growth comes through word of mouth. Dockery prefers to keep things this way. With two full-time assistants, along with the contributions of his wife, Andrea—a former SmithBarney financial advisor who is also a principal in Alpha Advisors—Dockery enjoys the familylike feel of his office and the close contact with clients that the firm’s small size facilitates. Reflecting on the market crash of 2008 and early 2009, Dockery says that it was a time to “measure your clients” to get a better sense of what risk means to them. His firm’s portfolios were hardly immune to damage during the downturn, Dockery acknowledges. Many active managers, even great ones, were punished by the market for sticking with their convictions. Dockery is convinced, however, that the year was an anomaly, and that over time, the proven managers he admires will sustain their advantage. Dockery’s clients seem to agree. Sharing his long-term vision, nearly all of the firm’s investors were willing to ride out the downturn and stick to their investment plans, he says. K
Josh Charlson is a senior mutual fund analyst with Morningstar.

managers with long-term records of success but to cover a wide canvas of asset classes and investment strategies in a portfolio. In addition to diversifying in the standard way across the equity and fixed-income style boxes, Dockery’s client portfolios also include mandates for what he labels alpha, strategic/ tactical, and alternative strategies. These categories allow Dockery to cast a net for investment opportunities that don’t fit the traditional boxes, provide lower market correlations, and capitalize on shorter-term market opportunities. For example, in early 2009 Dockery added 5% positions in high yield and technology, sensing that both sectors had been oversold relative to the market as a whole. Befitting his conservative temperament, Dockery chose Janus High Yield JAHYX and Ivy Science and Technology WSTAX to make these

bets. Both funds are moderate practitioners of their chosen sectors. While neither fund soared to the top of its category during the risk-loving environment of 2009, the sector bets added value over standard benchmarks.
A Consistent, Yet Flexible Process

Alpha Advisors typically links its clients to one of five basic portfolios, based on the client’s risk profile. Those portfolios are back-tested to fit particular risk and return characteristics, fully detailed in each client’s investment policy statement. But Dockery is willing to customize those basic models to match his clients’ specific preferences or concerns. One client, for example, long satisfied with a standard aggressive portfolio, expressed a desire for greater exposure to China. So Dockery tweaked the allocations to increase exposure to China, using a combination of Matthews Pacific Tiger

22 Morningstar Advisor June/July 2010

Morningstar Advisor - June/July 2010

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